WaMu may be the next taxpayer surprise. People with more than 100k on deposit at WaMu would be wise to start moving thier money to another bank in my opinion.
The takeover of silver state bank last week by the feds has magickly reduced depositors balance sheet by aprox. $20 million dollars.
The bank's expansion under Killinger into risky subprime and Alt-A mortgages led to $6.3 billion in losses over the last three quarters, with the stock losing nine-tenths of its value in the past 12 months. Management has said losses from one-family residential mortgages could approach $19 billion through 2011.
------- Best advice I have seen in a while. Suggest those 5% CDs from GMAC bank. Just make sure you don't have over 100k$ in any one account.
FWIW -- It looks like the conservatorships of Freddie and Fannie are a "credit event" in the terms of the CDS agreements. The numbers involved are not finance but astronomy....
1,400,000,000,000$US for just these two corporations.
For more info click on
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"From Bloomberg:
Investors may be forced to settle contracts protecting more than $1.4 trillion of Fannie Mae and Freddie Mac bonds against default after the U.S. seized control of the companies in a bid to bolster the housing market.
Thirteen ``major'' dealers of credit-default swaps agreed ``unanimously'' that the rescue constitutes a credit event triggering payment or delivery of the companies' bonds, the International Swaps and Derivatives Association said in a memo obtained by Bloomberg News today. Market makers for the privately traded contracts will discuss how to settle them in a conference call at 11 a.m. in New York, the document said.
``This is a big deal,'' said Sarah Percy-Dove, head of credit research at Colonial First State Global Asset Management in Sydney. ``The market is not experienced at settling a credit event for a name of this size, so it is a bit of an unknown.''...
Both companies also are among 125 companies in the benchmark Markit CDX North America Investment Grade Index, the most actively traded contract in credit markets...
The actual money exchanged may be limited, though, according to analysts at CreditSights Inc. Buyers of the contracts are paid face value in exchange for the underlying securities or the cash equivalent."
An additional problem is that far more CDSs appear to exist than actual bonds, estimated as an order of magnitude [i.e. 10X] this ups the amount of dollar transactions through the system in the future because of just these two "credit defaults" to
14,000,000,000 $US.
for the markets' take on the effect on the US national debt see
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